The Sweetener Wars | Attack of the Cancer Rats | 1

0:28Hey, Business Wars fans, have you heard?

0:35Health Secretary Robert H. Finch today ordered a ban on foods and drinks containing the artificial sweetener Cyclamate. It's October 18th, 1969. At his beachside home in Queens, New York, Marvin Eisenstadt stares open-mouthed at the TV. The Evening News is reporting on how the federal government has just nuked his business. Marvin is the executive vice president of Cumberland Packing, the maker of sugar substitute Sweet 'n Low, and the government has just banned one of its core ingredients, the artificial sweetener cyclomate. It's a dizzying turn of events. Earlier that month, the FDA reassured the nation that cyclomates were safe after a flawed study claimed they'd deformed chicken embryos.

1:23But now there's a new study, and this one found that some rats developed bladder cancer after being fed large amounts of the sweetener. Marvin turns to his wife, his shock, turning to rage. This is nonsense. A man would have to drink hundreds of cans of diet soda a day to consume the same amount of cyclamates they gave those rats. They're killing a billion-dollar business on junk science. Marvin's wife nods sympathetically as he paces the room. He knows the government had no choice, A law called the Delaney Amendment requires that any additive shown to cause cancer has to be banned from non-prescription food and drink, no matter how tiny the risk.

2:05Marvin thinks the law's idiotic, but he can't fix that. What matters is that Sweet 'n Lowe and the family business now face extinction when the ban takes effect in just over three months from now. He hurries to the phone and calls the boss of Cumberland, his dad. Hey, Pop, it's Marvin. You heard the news? Yes, I heard the news, and I'm furious. Yeah, yeah, I know. No, this is outrageous. But listen, Pop, I got a plan. Remember the all-saccharin recipe? The kosher one? Yeah, the kosher one. I'm thinking we switch to that. Hmm. Actually, that's a great idea. Fantastic. We should move fast. Yeah, that's what I'm thinking.

2:51We should call everyone in. Start tonight. No delays. You're a smart cookie, Marvin. Thanks. We'll see you there. With that, Marvin grabs his coat and heads to the company's factory in Brooklyn. He's about to set into motion a plan that won't just save sweet and low. It will make it king of the table sugar substitutes.

3:19Police in Irvine, California are investigating the double murder of a young couple in the parking lot of their apartment complex. A double homicide grabs the public's attention by the throat. We have identified Christopher Dorner as a suspect in this double homicide. A former cop and still on the loose. Considered armed and extremely dangerous. And scariest of all, he left something behind. A particular interest is a multi-page manifesto. This manifesto on Facebook is 11 pages long. Trace, this manifesto from this suspect who's targeting cops, it's stunning. Listen to the show The New Yorker calls one of the best podcasts of the summer.

3:58Dan Taberski's Manifesto. And I tell you, this manifesto, it scares the hell out of me. Listen to Dan Taberski's Manifesto wherever you get your podcasts or binge the entire series right now, only with Audible.

4:17The next few days are a blur of activity. Marvin's plan is to change Sweet & Low's recipe from a mix of cyclamates and saccharin to 100 % saccharin. He knows the competition will do the same. Saccharin is the only other artificial sweetener available. But what those rivals don't have is a recipe that's ready to go. Saccharin tastes less like sugar than cyclomates and leaves a metallic aftertaste, so it needs to be mixed with something else to make it more palatable. But Cumberland's already solved that problem. Years earlier, the company developed a kosher version of Sweet 'n Low that used dextrose and cream of tartar instead of the dairy product lactose and also contained no cyclomates, just saccharin.

5:07It did okay in taste tests, but never went into production. Now that mothballed project is about to pay off. Cumberland rewires supply chains, reconfigures machinery, and reorders production lines. It redesigns Sweet & Lowe's packaging to promote the absence of cyclomates, and secures an emergency loan of a million dollars to pay for everything. Then the company phones every distributor and tells them to dump their entire stock of Sweet 'n Low. This costs Cumberland$2 million. But it clears the path for the new formula to hit stores immediately. On October 22nd, just four days after the ban was announced, the reformulated product is on trucks leaving the factory, and newspapers are running ads for the new and improved Sweet 'n Low without cyclamates.

6:02Sales triple as Sweet 'n Low grabs customers and shelf space from slower-to-react rivals. Before the ban, Sweet 'n Low was a mid-sized player in a packed field. Now, its bright pink sachets are everywhere. Within 18 months, Sweet 'n Low captures more than half of the tabletop sweetener market. By the time the competition releases their Cyclomate-free alternatives, it's too late. Marvin has turned disaster into the ultimate victory. And it'll stay that way right up until Saccharin becomes the government's next target.

6:50From Audible Originals, I'm David Brown, and this is Business Wars.

7:18This is a story that began with a mistake. A chemist forgot to wash his hands before dinner, then wondered why his bread tasted so intensely sweet. He traced the source back to his lab, to a compound he later named saccharin, the world's first artificial sweetener. Until then, sweetness came from natural sources like sugarcane, corn syrup, and honey. But it also came packed with calories. Saccharin and its followers offered something miraculous, sweetness without the calories. They didn't taste as good as sugar. But for legions of calorie counters and diabetics, it was a price worth paying. By the 1960s, saccharin and cyclamates were threatening sugar producers as people switched from full sugar colas to diet sodas and stores stocked low-calorie desserts.

8:16But then, cyclamates got banned on the back of a now-debunked study. And ever since, artificial sweeteners have been loved and distrusted in equal measure. So, what does it take for sugar substitutes like Sweet 'n Low, Equal and Splenda to thrive when scientists, regulators and health-conscious consumers continually threaten ruin? It takes cunning. Because the sugar substitute business is anything but sweet. It's a world of backroom deals in D.C. fraudsters infiltrating factories, manipulation of public perception, and bitter courtroom showdowns. This is Episode 1, Attack of the Cancer Rats.

9:08By 1977, Sweet 'n Low manufacturer Cumberland Packing is the sugar substitute king. Since its lightning-fast switch to saccharin, its position has proved unassailable. Not even the oil crisis of 1973 could stop it. When the OPEC oil embargo hit, gas prices spiked by 50 percent and fuel shortages spread across the country. The shortages threatened to halt deliveries. So, Cumberland bought a gas station to make sure its trucks kept rolling. It's a far cry from 1940 when Marvin Eisenstadt's father, Ben, started the business as a cafeteria across from the Brooklyn Navy Yard. After the war, his customers disappeared, so he retooled the place into a teabag factory.

9:57The company struggled, so he pivoted again, repurposing the teabagging machine to pack individual packets of sugar, ketchup, soy sauce, and more for the food service industry. Then, one day in the 1950s, a pharmaceutical company asked if he could pack a sugar substitute into individual sachets for diabetics to use in hospitals. By the time Cumberland created the product, the drug company had lost interest. So, Ben and his son Marvin released it themselves in 1957. They called it Sweet and Low, after a sheet music tune from the early 1900s, and put it in bright pink paper packets so it stood out from the white packaging used for sugar.

10:44Now, those pink packets are ubiquitous, from diners and coffee houses to hotels and airlines. Sweet and Low has become America's best-selling sugar substitute. But after seven years on top, trouble is coming.

11:06It's 1977, and Marvin Eisenstadt is trying to calm his nerves. He's in the studio of WNBC-TV in New York and about to make his live television debut. Marvin is here because fears about artificial sweeteners are in the headlines again. This time, saccharin is under suspicion. There's been a steady flow of studies questioning its safety for years, many funded by sugar producers. But the latest study is different. This one was bankrolled by the Canadian government. It found that rats fed large amounts of saccharin are more likely to develop cancer, prompting Canada to ban the sweetener. Marvin's not worried, though.

11:51The scientists gave those rats so much saccharin, It'd be like a human drinking 800 cans of diet soda a day. Sure, the scientists countered that the large amount was necessary because rats have a much higher metabolic rate than humans. But Marvin's point is simple. This study doesn't prove saccharin is a carcinogen. And any risk is very low. One minute to air. Besides, Marvin has been reassured that the Food and Drug Administration wouldn't ban saccharin without a fair hearing. Plus, saccharin is the only artificial sweetener on the market. To ban saccharin is to ban all artificial sweeteners.

12:32Frank Field, the newsman who's interviewing Marvin, arrives. He holds a teletype message in his hand. Marvin, pleased to meet you. A quick heads up, we just got this in. 30 seconds. Field sits. A makeup lady rushes in to give him a quick touch-up. The cameras roll into position as Marvin stares at the teletype. The FDA has just announced that saccharin will be banned. Ten seconds. Eight, seven, six, five. Marvin's business, and the entire sweetener industry, is toast. He looks up. The countdown ends. He barely registers Field announcing the saccharin ban or introducing him to viewers. Not until Field asks his first question.

13:19Marvin, what's it like being put out of business?

13:28The decision to ban America's only artificial sweetener sends shockwaves through the nation. There will be no more diet soda, no sugar-free gum, no reduced-calorie desserts, no diabetic-friendly baked goods, no flavored medicines, and no more Sweden Low. With the ban expected to go into effect in just four months, panic erupts. Consumers rush stores to stockpile supplies before they disappear. Some call the FDA in tears, pleading with them not to take away their sweetener. But the Delaney Amendment is clear. Any additive found to cause even the slightest increased risk of cancer must be banned.

14:13With Cumberland's future on the line, Marvin goes on the attack. In newspaper interviews, he calls the ban outrageous, harmful, and built on flimsy science. He appears in ads buried up to his neck in sweet and low packets to show how many someone would have to consume to mash the saccharine dose given to those lab rats. His dad, Ben, Cumberland's founder, heads to D.C. to deliver angry testimony to Congress. He also finds ways to pressure the government into overruling the FDA. Cumberland publicly declares it has stopped making Sweet 'n Lowe and put 700 employees on forced vacation. The announcement stokes customer panic and inspires unions to join the fight to save jobs.

15:04But it's all a ruse. Sweet 'n Lowe remains in production. None of Cumberland's employees are facing layoffs. In fact, the surge of panic buying has caused Cumberland to add another shift at its factory just to keep up with demand. And Cumberland's not fighting alone. The entire sweetener industry is battling to survive. Cyclomates are already gone. Other sweeteners are struggling to get approved. Saccharin is the only option. And if it goes, a$2 billion industry will go with it. Under pressure from every direction, Congress finally intervenes. It overrules the FDA and delays the ban by 18 months.

15:56But this stay of execution comes with a cost. All food and drink containing saccharin must now carry a warning that it causes cancer. It's far from ideal. And with no alternative sweetener to turn to, the future looks bleak. Sweet and Low entered 1977 riding high. Now, it lives under the threat of imminent destruction.

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17:40April 1977, Illinois, one month after the FDA announced its intention to ban saccharin. In a conference room, G.D. Searle and Company is hosting its annual shareholder meeting. Founded in 1888 by a Chicago chemist, Searle is now a major pharmaceutical company, famed for introducing Enovid, the first oral contraceptive. But these days, the company's ailing. It has delivered eight straight quarters of weak earnings, and its stock price has dropped by half. The company is also under investigation for its animal safety research practices, accused of, at best, sloppiness, and at worst, deliberate falsification, including concealing tumors that developed in lab animals during tests.

18:29The fallout has led to some of Searle's new products being denied approval, including a new artificial sweetener called aspartame. With the business in crisis, Searle's board of directors is parachuting in a new CEO, Donald Rumsfeld, the former Secretary of Defense in President Ford's administration. The choice is raising eyebrows among the stockholders who will sign off on his appointment. Rumsfeld knows nothing about chemistry. He's a career politician with zero business experience. And Searle is no mom and pop. It's a multinational with annual sales of more than$760 million. After Rumsfeld is introduced, a middle-aged woman stands.

19:16My name is Ethel Shapiro. I'm a shareholder. Mr. Rumsfeld, you've not worked in business before, let alone a company like this one. So, why are you worth the quarter of a million dollars annual salary that you'll receive as CEO? Rumsfeld smiles. That sounds a lot like my mother. She was surprised too.

19:43Now, I'm not the only one who set my salary. The board of directors did. Whether I am worth it, I'll have to prove that to all of you. The board will have many opportunities to review my performance and determine whether I deserve that level of compensation, but I intend to do my best to earn it. Rumsfeld might be untested, but Searle's directors believe he can make the tough calls needed to fix the business. He starts not so much by swinging the axe as wielding a chainsaw. He slashes budgets, shrinks headcount, decentralizes decision-making, and sells off non-core businesses. He also makes it a priority to get aspartame out of regulatory hell.

20:37Like saccharin, aspartame was an accidental discovery. Back in 1965, one of Searle's chemists was working on an anti-ulcer drug when some of the compounds spilled on his hand. He then licked his finger to turn a page of a book and was taken aback by the sweetness. After telling the chemist off for his sloppy lab habits, the company realized he'd stumbled on something big, an artificial sweetener that's extremely sweet, with a slight bitterness but free of the metallic aftertaste that comes with saccharin. After further study, Searle patented aspartame in 1969 and asked the FDA to approve it as a food additive.

21:18To speed up the process, Searle only asked for permission to use it in dry foods. It hoped aspartame could fill the gap left by the cyclamate ban. But then the setbacks came. Aspartame's first problem is its phenylalanine content. Phenylalanine is an amino acid, a building block of proteins. It causes most people no harm, but for those with an inherited condition called PKU, it's dangerous, capable of causing brain damage and intellectual disability. So, Searle agreed that products containing aspartame must carry a warning label about this. The FDA approved aspartame in 1974, but the decision was immediately challenged over concerns it could cause brain damage in children when combined with monosodium glutamate.

22:09So Searle did more research. But while that was happening, the company's flawed lab practices came to light. Its aspartame tests were re-examined, revealing poor record-keeping and errors in the data. The FDA responded by putting its approval on pause, leaving aspartame trapped in regulatory purgatory. And it stayed there for years. The time left on the patent ebbing away. Morale at Searle corrodes, and Rumsfeld is running out of patience. In January 1980, the FDA finally moves, but not to approve aspartame. Instead, it makes aspartame the guinea pig for a brand new approval process for food and drink additives by seeking advice from a panel of university scientists.

23:03The FDA calls it a public board of inquiry. The process drags on for months. And Rumsfeld knows the business opportunity is slipping away. The aspartame patent expires in 1987. If approval doesn't come soon, Searle will never recoup its investment. In fall 1980, Rumsfeld decides enough is enough. He orders his lawyers to sue the FDA for failing to make a decision. Searle's outside counsel advises him not to. Suing the regulator is a bad look and could make it harder to get approvals in the future. Rumsfeld does it anyway. A few hours after the lawsuit is filed, the public board of inquiry finally delivers its recommendation.

23:55It advises the FDA to withhold approval because the risk of brain tumors can't be completely ruled out without longer-term studies. Rumsfeld goes wild when he hears the news. There have been dozens of studies saying aspartame is safe, but now they want more. And more studies means more time. And with the patent clock ticking, time is something Searle does not have. So, Rumsfeld reframes the problem. He decides it's no longer a scientific issue. It's a political one. He works his Beltway contacts and leverages his new side gig, advising President-elect Ronald Reagan. It soon pays off. In April 1981, President Reagan installs pharmacologist Arthur Hayes as the new FDA commissioner.

24:51Three months later, Hayes overrules the public board and approves aspartame for use in dry foods on the grounds that the board misinterpreted some of the data and that another study found no evidence of aspartame increasing the risk of brain tumors. Now, Searle must make up for lost time. The company uses its political influence to get Congress to pass a law with a single purpose, to extend the patent on aspartame until the end of 1992. Searle's executives also pick up the phone and invite the makers of Sweet 'n Low to a meeting.

25:31It's 1981, and in Skokie, Illinois, Cumberland President Marvin Eisenstadt and his father, founder Ben, are in a large meeting room at Searle's headquarters. Sitting opposite them is a squad of slick Searle executives and lawyers. Behind them, floor-to-ceiling windows offer a view of a parking lot and a highway. It's a world away from the red brick buildings that surround Cumberland's factory in Brooklyn. Out of the corner of his eye, Marvin notices a Searle executive in a nearby office practicing his golf putting. The Searle executive who invited them here slides a folded slip of paper across the table.

26:11This is our offer. I think you'll find it generous. Marvin unfolds the note. He and his dad stare at the multi-million dollar figure written on it. It's way more than Cumberland is worth. Ben looks up, surprised. Yeah, that's generous, but, uh, why? Well, as you know, we're about to bring aspartame to market and we intend to get into the tabletop sweetener business. We think Sweet 'n Low is a great brand with a strong market position, so we want to turn Sweet 'n Low into an aspartame-based product. And eliminate your biggest competitor, saving you millions in marketing costs, eh? The sural executive smiles.

26:55Well, that's one way of looking at it. But we think this deal would be in all of our interests. That's why we're offering a more than fair sum. We're thinking part cash, part stock, and a vice president position for Marvin. Ben and Marvin knew a takeover offer was coming. and they've already decided they're not interested. Marvin folds up the slip of paper. We don't want to sell. We value our independence and are loyal to our employees. Now, we'd be open to discussing a merger, one where we maintain our independence. Well, a merger of that kind isn't of interest to us, but we could explore assurances on jobs.

27:39Maybe no job losses for the first year? Marvin shakes his head. No, I have to be able to sleep at night. Look, you're a big corporation. I know you'll end up laying people off. But we're a family business. Loyalty matters to us. You agree, Pop? 100%. The Searle team looks put out. Then the mood shifts. Well, I would urge you to reconsider. We're entering the tabletop sweetener market one way or another, and you know that aspartame tastes better than saccharin. And you also know it doesn't come with a this-might-cause-cancer warning label. The FDA could pull the plug on saccharin any day. Your business is a castle made of sand.